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Old 01-19-2015, 03:33 PM
 
2,355 posts, read 1,396,775 times
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Hi all,

I understand that Obama is going to be giving a speech tomorrow and in it will be offering a new tax plan. There are some specific parts that could greatly effect me, as I will be inheriting several million dollars in the near future. From what I've read, he is proposing that within a Trust there will no longer be a 'stepped up basis' for the heirs....In other words....currently if the trust holds a stock purchased for 10k and it is now worth 100k...the new basis is 100k for the beneficially of the trust when inherited....Obama would like to reverse that, and have the new basis remain the same as the old basis...so the person inheriting the stock would be on the hook for tax on 90k capital gain. As I've spoken with my elderly father, he has purposefully not sold many of his stocks that have had tremendous gains, because he would then owe taxes, and he knows when I inherit these stocks I would have the stepped up basis and would not pay taxes. If indeed there is a change in the tax law, my father may decide to sell his stocks soon, while they are at a very high level and the capital gains is only 15% vs 28% (proposed) down the road.

I don't claim to be an expert here, and may have some details wrong, but was curious to hear other viewpoints on this subject.
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Old 01-19-2015, 03:49 PM
 
11,768 posts, read 10,227,786 times
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Obama can't do anything by himself and Congress is controlled by Republicans who 1) oppose anything he wants to do, and 2) don't want to increase taxes.
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Old 01-19-2015, 04:12 PM
 
777 posts, read 1,865,908 times
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Obama's "revised" tax proposal is just that - a proposal. Congress is unlikely to approve it in whole or part, though they could return with their own set of tax changes. Incidentally, a portion of inherited gains are exempt under Obama's proposal.

Without knowing the fine print, or if the proposal will ever become law (in some shape or form) it is premature to draw any conclusions.
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Old 01-19-2015, 07:21 PM
 
2,355 posts, read 1,396,775 times
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Quote:
Originally Posted by Iggier View Post
Obama's "revised" tax proposal is just that - a proposal. Congress is unlikely to approve it in whole or part, though they could return with their own set of tax changes. Incidentally, a portion of inherited gains are exempt under Obama's proposal.

Without knowing the fine print, or if the proposal will ever become law (in some shape or form) it is premature to draw any conclusions.
Yes I realize it will have a hell of a time getting passed. I just wanted to here some viewpoints like yours. The bolded part of your post was something I hadn't heard, so thanks for that. In 24 hours, we will know all the details. I realize the nation is in serious debt and can't say I blame him for taking a run at inheritances.
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Old 01-19-2015, 07:41 PM
 
Location: Paranoid State
13,044 posts, read 13,808,417 times
Reputation: 15837
This is posturing.

If Obama had wanted this done, he would have proposed it back when there was a Democratic majority in both the House and the Senate.

He didn't propose this then, because his wealthy Democratic sponsors would have castrated him.

He waited until there is a Republican majority in both the House and the Senate. He knows full well this will go nowhere. All he is trying to do is get gullible journalists to write about Republicans protecting their base.

Note -- if he really wanted something that would pass, he would propose raising taxes on the wealthy -- e.g., those with over $25 million/year in income. Everyone would get behind it. But that isn't his goal. His goal is to embarass Republicans.
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Old 01-19-2015, 07:57 PM
 
26,176 posts, read 21,441,832 times
Reputation: 22766
Quote:
Originally Posted by ticking View Post
Hi all,

I understand that Obama is going to be giving a speech tomorrow and in it will be offering a new tax plan. There are some specific parts that could greatly effect me, as I will be inheriting several million dollars in the near future. From what I've read, he is proposing that within a Trust there will no longer be a 'stepped up basis' for the heirs....In other words....currently if the trust holds a stock purchased for 10k and it is now worth 100k...the new basis is 100k for the beneficially of the trust when inherited....Obama would like to reverse that, and have the new basis remain the same as the old basis...so the person inheriting the stock would be on the hook for tax on 90k capital gain. As I've spoken with my elderly father, he has purposefully not sold many of his stocks that have had tremendous gains, because he would then owe taxes, and he knows when I inherit these stocks I would have the stepped up basis and would not pay taxes. If indeed there is a change in the tax law, my father may decide to sell his stocks soon, while they are at a very high level and the capital gains is only 15% vs 28% (proposed) down the road.

I don't claim to be an expert here, and may have some details wrong, but was curious to hear other viewpoints on this subject.


The cap gains change wouldn't hit everyone and I think the top rate for is already 20%. The inheritance tax change I believe is around basis in trust accounts in generation skipping trust. The current inheritance exemption of 5mm+ per person would still apply
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Old 01-19-2015, 09:09 PM
 
2,485 posts, read 2,208,514 times
Reputation: 2140
Quote:
Originally Posted by SportyandMisty View Post
This is posturing.

If Obama had wanted this done, he would have proposed it back when there was a Democratic majority in both the House and the Senate.

He didn't propose this then, because his wealthy Democratic sponsors would have castrated him.

He waited until there is a Republican majority in both the House and the Senate. He knows full well this will go nowhere. All he is trying to do is get gullible journalists to write about Republicans protecting their base.

Note -- if he really wanted something that would pass, he would propose raising taxes on the wealthy -- e.g., those with over $25 million/year in income. Everyone would get behind it. But that isn't his goal. His goal is to embarass Republicans.
Of course this is a political strategy and politically skilled. I have yet to hear and see the specifics of this policy. But as everyone has sat here, it is unlikely to pass and Obama himself probably knows it.
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Old 01-20-2015, 06:11 AM
 
4,344 posts, read 2,773,444 times
Reputation: 5814
Republicans weren't given control of the Senate to raise taxes. They weren't given their largest House majority since 1920 to raise taxes. Or the most governorships or control of most state legislatures to raise taxes.

If anything, you'll see them offer tax simplification: eliminating deductions and lowering rates. Maybe capital gains and inheritance trusts will be part of package. I hope so. But no one in the Senate, no one from either party, wants to fool with inheritance trusts. Which is a shame.
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Old 01-20-2015, 08:17 AM
 
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,245 posts, read 80,480,482 times
Reputation: 57160
Such proposals are meant to demonstrate his (and his party's) disdain for the rich, to help ensure continued votes in the future by the "99%" protest people and their supporters. Whether or not it actually becomes law is irrelevant, because he can blame the Republicans for the failure to pass.
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Old 01-20-2015, 10:07 AM
 
2,485 posts, read 2,208,514 times
Reputation: 2140
Quote:
Originally Posted by Hemlock140 View Post
Such proposals are meant to demonstrate his (and his party's) disdain for the rich, to help ensure continued votes in the future by the "99%" protest people and their supporters. Whether or not it actually becomes law is irrelevant, because he can blame the Republicans for the failure to pass.
Does his party have a real distain for the rich?

If he were serious, why did he not do it when the democrats had the house and the middle class were suffering in the middle of the recession?
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